Fear of Credit Card Applications – Getting Started

I’ve been dealing with people’s credit my whole life. I helped people with car loans first, then dealt with mobile home repossessions for banks, owned a mortgage banking firm underwriting and servicing home loans, and did credit counseling for individuals in trouble for the Veterans Administration. Credit has been my life and I get great satisfaction helping people achieve their credit goals.

But just this last week I got a huge awakening to the younger generations feelings and fears around credit. I sat with three 20-somethings that work for Internet Brands (owners of Flyertalk) and we talked about their credit and applying for credit cards.

These youngsters were paralyzed with fear regarding their credit. The fear was so great that I had a hard time convincing one of them to even check her credit score. The whole experience led me to believe that I’ve done a less than stellar job convincing people that this is a game they can, and in many cases, should actually play. Let me try again to dispel some of the misstatements and facts regarding applying for credit cards.

1. Checking your credit score will not impact that score. I recommend CreditSesame as it is quick, easy, free and gives you a starting point to determine where you actually stand in the eyes of potential creditors. To alleviate the fear, YOU are the one ultimately that controls your credit file… YOU determine what things you are willing to try, how many applications you may make if any, and if this game is even something you should consider.

The starting point is knowing your credit score. Free, quick, easy, and painless. If nothing more comes of this post than you at least check your credit score, we both have made great strides in personal responsibility. Everybody should know their credit score. It can open up a world of possibilities for you from owning a home, buying a car, getting a student loan, or travelling the world for free. Fear of the unknown actually prevented one of my California friends from checking the score. She was afraid of knowing.

Keep in mind, you have THREE credit scores. The score CreditSesame provides is a representation of your score from Experian. Don’t forget about Equifax or TransUnion. While in most cases you’ll likely see similar scores across all three bureaus, they’re not identical but will be similar for most of us.

2. If you are a responsible individual, creditors want you to take advantage of their services. There are few of us that can pay cash for a car, a home, college education, or extensive travel. If we want these things in life, we need to step into the world of credit. Many are afraid because it is an unknown, unfamiliar area. I will help you through it and help you make the correct moves. I am a fiscal conservative, own my home free and clear, autos as well and live a frugal life other than free travel.

That is who I am, and how I help those that ask. If you are afraid I’ll tell you the game is not for you, I’m telling you for your own good. It is not a death sentence just a wake up call. People can improve their credit scores and credit files by making the right moves and intelligent credit decisions.

Your next step after getting your credit score is getting a copy of your credit report. It is free, easy and mandated by the government that you have access to your credit report free at least once per year. Go to AnnualCreditReport.com and follow the prompts. You are entitled to see how creditors look at your credit history and should do the personally responsible thing and check that report for accuracy Credit reports have errors; the numbers are anywhere from 10% to 80% … I think we’re somewhere in middle. Make sure you review your report for accuracy. It could mean the difference between getting a car loan, student loan, or dream come true trip.

Now, armed with these two free essential pieces of information that all of us should have, we can map out a strategy to help you improve your score if need be, or take advantage of the free travel options out there just waiting for you. The cost is free, the time involved in minimal and there really is no logical reason to not arm yourself with information that others already have about your credit. You are not alone.

“You have nothing to fear but fear itself” -FDR

Deal of the Day

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BobChi

I appreciate the thinking in this post. There is so much confusion and fear. My friends look in awe at the travel I do and exclaim how lucky I am to be traveling the world the way I do on my salary. I tell them the secret is credit card bonuses and they can do it to. I offer to help with links and strategies. Bu that usually ends the conversation pretty quickly, due to factors you raise here.

There are indeed many people who cannot or should not be doing credit cards for enrollment bonuses, either because they have a bad credit history, know they cannot handle credit well, or have other needs for credit. But the idea that it is perfectly OK for someone with good credit to make use of that asset to claim free travel is lost on many. Your credit score is an asset to be used, not a trophy to set in a display case.

Lauren

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Don’t forget about awesome off-peak awards. I use them to fly from JFK (my home airport).

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http://twitter.com/RZachSmith Zach Smith

Why not mention credit karma as well as a free way to check your credit score with a different bureau?

chemist661

We do some CC churning. We have no more needs for mortgage or car loans as I recently did 3 rental house refinances. After the refinances closed, we each applied for 3 CC’s each–all approved.
Both my wife & I have no need for new loans as our principal residence & cars are paid off. We have no debt except for my rentals. My wife’s scores are above 750 with active churning and my scores went from 805 (mid bureau in June 2012) to 750-760 with all the new accounts (3 CC’s & 3 new mortgages). To us any FICO’s above 720 are sufficient for CC churning.
We both are in the mid/late 50’s and have thick/deep credit files dating back to the mid 1980’s so the scores drop 30+ points initially but recovers within a few months. (for the next churn :))

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